JAL may miss deadline for rehabilitation plan

Japan Airlines and the Enterprise Turnaround Initiative Corporation of Japan (ETIC) are reportedly negotiating to delay submission of the airline's rehabilitation plan for approximately two months from the 30-Jun-2010 deadline (Yomiuri Shimbun, 23-Apr-2010). The delay is related to the inability of JAL and ETIC to reach consensus with creditor banks on reductions to flight routes and personnel.

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Jetstar Japan and Peach Aviation have received air traffic rights for China which, if utilised, would grow the Japanese LCC footprint in China – Japan's largest visitor source market. Spring Japan became the first Japanese LCC to serve China in Feb-2016. The absence of Japanese LCCs in China may seem surprising, but there are regulatory hurdles, market access questions and conservatism at Japanese LCCs. AirAsia Japan, launching in 2017, will likely leverage the group's China experience; it is the largest non-greater China airline group serving China.

The prospect of further growth comes as incumbents cite overcapacity. What was once a profitable market now only produces returns in the peaks. All Nippon Airways, the largest airline between Japan and China, reported lower revenue on the back of "a deterioration in the supply-demand environment". Spring China has told Bloomberg that some competitors "aren't well-prepared", and will be "phased out". Overall Japanese LCC routes and capacity may be small but will be watched by Chinese airlines, ever mindful of the need to find new business models.